For a car in this price range, there's a lot of things to consider. The car payment itself, insurance, gas, those are obvious. But then you get things like maintenance, the little 'oops' things that you would want to have fixed immediately on a car in this range [door dings, flat tire, whatever, call it incidentals if you will], and who knows what else. Sure, maybe you can make it fine with no money in the bank right now, but what if you lose your job, become sick, or anything else. You're boned. I agree with what was said above, that ALL of your bills should be able to be covered by your savings, at least for a few months.